Schnabel (ECB): “Food price inflation is accelerating again”

Brussels – The nightmare of “high prices” is again looming in Europe, with the cost of foodstuffs considered to be on the rise again. Sounding the alarm is Isabel Schnabel, member of the Governing Council of the European Central Bank, at the meeting of the chief economists of the European Investment Bank (EIB). Here, the German ECB economist pointed out that “food price inflation is re-accelerating, posing risks to consumer inflation expectations.”

On the one hand, Schnabel’s claims contradict Eurostat, according to which the price of food and drink also fell between July and August (from 3.3 per cent to 3.2 per cent). At least, that is what the latest data confirms. On the other hand, the same ECB board member warns how these expectations could negatively affect consumer spending at a time of renewed momentum. 

“Domestic demand has recovered robustly despite a challenging global environment,” he emphasised in his Luxembourg speech. Until the second half of 2024, domestic demand recorded negative values, but then experienced a steady turnaround to 1 per cent in the third quarter of 2024, 1.3 per cent in the fourth quarter, 2.1 per cent in the first quarter of 2025 and 2.8 per cent at the end of the March-June 2025 period. Hence, the suggestion to “rebalance the economy towards consumption,” but the rising cost of the shopping cart seriously risks curbing purchases elsewhere, leading domestic demand to deflate.